Tuesday, May 08, 2012

Should You Need a Government Permission Slip Before You're Allowed to Earn an Honest Living?

"License to Work: A National Study of Burdens from Occupational Licensing is
the first national study to measure how burdensome occupational
licensing laws are for lower-income workers and aspiring entrepreneurs. The reportdocuments
the license requirements for 102 low- and moderate-income
occupations — such as barber, massage therapist and preschool
teacher — across all 50 states and the District of Columbia. It finds
that occupational licensing is not only widespread, but also overly
burdensome and frequently irrational.

On average, these licenses force
aspiring workers to spend nine months in education or training, pass one
exam and pay more than $200 in fees. One third of the licenses take
more than a year to earn. At least one exam is required for 79 of the
occupations. Barriers like these make it harder
for people to find jobs and build new businesses that create jobs,
particularly minorities, those of lesser means and those with less
education.

License to Work
recommends reducing or removing needless licensing barriers. The
report’s rankings of states and occupations by severity of licensure
burdens make it easy to compare laws and identify those most in need of
reform."

67 Comments:

Funny you should post this, Dr. Perry. I just came across this blog post by David Henderson discussing how businesses cite licensing as their main concern when discussing the business-friendly atmosphere in their state.

Occupational licensing is a nefarious combination of state plunder and rent seeking. We don't need licensing (or accreditation) for attorneys, pharmacists, barbers, HVAC workers, exterminators or a battalion of other occupations.

this can be argued both ways. Have you ever sat in a dental chair with the tech moving that x-ray machine up around your brain and wondered if it mattered who inspected the machine or if the tech had training?

this can be argued both ways. Have you ever sat in a dental chair with the tech moving that x-ray machine up around your brain and wondered if it mattered who inspected the machine or if the tech had training?

What is particularly annoying is regulations that require one to get certified by an association, ususally composed of memebers who will be future competitors.

An example is a building code requirement that construction consists only of graded lumber. It only takes three days to go to school to learn to grade lumber, but it costs several hundred dollars a month to have permission to then grade your own lumber!

more blather from Miss foul-mouth here who apparently does not believe that dental techs should be qualified to used xray equipment or she prefers instead to blather Ad Hominems rather than anything intelligent.

I don't need the state to certify my pharmacist or anyone else. Private certification would do the job more efficiently and cheaper.

Do have any idea what the licensing requirements are for doctors or pharmacists? Neither do I. Private certifiers would have to compete for consumers' attention and would have every incentive to make transparent their certification process.

There's no industry and their consumers that couldn't benefit from private certification over government licensing.

If there is no state requirement to be certified, why would I sign up fo private certification?

And isn't that what the lumber grading certification already is?

Three days to grade lumber vs three years to study pharmacy seems a lot different, and a lot higher standard of performance should be required.

Your argument that private certification would be cheaper and more efficient does not seem to be borne out by the facts: instead, private certification agencies are as much into self aggrandizement and increasing their power base as they are into making the occupation safe and reliable.

Interior Design is listed by the Institute for Justice as the most "onerous" of licensed occupations.

Apparently DC, FL, LA and NV are the only states demanding 2190 days of training to avoid interior design faus pas. Six years of training to throw out dusty plastic flowers, white ceilings, and too many area rugs is probably worth it. I would stand my ground on keeping my cluttered countertops, despite the demands of highly trained design commandos. :>)

BTW, the IJ states "..the American Society of Interior Designers has waged a 30-year campaign in state legislatures seeking greater regulation of its industry, including occupational licensure. The cornerstone of its argument is the alleged threat to public health and safety from unlicensed interior design,..."

Now obviously you can go to either a government run or private college and get degreed in various computer sciences, right?

Chances are if you went to a decent school you'll have a good foundation to work from...

Still when its all said and done many employers will insist that you have one or more of these types of certifications that are not government mandated or regulated before they let you work on their equipment...

The real kicker here is that to take and pass the tests to get the certifications needed one doesn't actually have to be a high school graduate if one can exhibit the skills necessary to perform the work...

What Juandos said. Also, while government regulators insist on registrations like series 7 and 63 licenses, those licenses exist solely for the regulatory bureaucracy to collect more fees from industry. That's not what they say, of course, but that's the reality

It's just part of the constant shake-down. Every employer understands that those licenses are meaningless.

Interestingly, so do investors. for instance, the CFA has become more valuable than an MBA and both are infinitely more valuable than any of the SEC registrations to both asset management firms and their investors.

if the government want to offer a CPA certificate, great. but you do not need one to be an accountant. it's up to you, the accountant, to decide if you think that credential is worth it and me, the customer, to decide if i care that you have it.

if an employers wants you to be cicso certified, that's up to them and then to you. or, you can go work somewhere else or they can decide they don't care after all.

want to be a barber? go for it. there ought to be no license. might i care if you studied at a top new york salon as opposed to picked it up as you went along, yup, absolutely. but that's no reason everyone should or ought to be made to.

Actually, in most jurisdictions the fellow that fixes your furnace doesn't need a license. Be that as it may, there are plenty of businesses that operate with non-governmental accreditation. The sanitary construction of the kitchen equipment in the restaurant you eat in is covered by the National Sanitation Foundation. The safety of the electrical appliances in your home is determined by Underwriter's Laboratory or the Canadian Standards Association. The quality of the higher education you maybe received was accredited by a private organization like the Southern Association of Colleges and Schools, not a government agency.

many employers will insist that you have one or more of these types of certifications that are not government mandated or regulated before they let you work on their equipment...

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Yes, i think we are on the same page for once, sort of.

I see a couple of differences: Once you have a PMP for example, you do not have to pay $400 a month for the right to use it, as with the lumber cert example. However, much the same idea is incorporated in the requirement for "continuing education" or member ship in some organization.

I have qualifications similar to those required by several of the certs menstions in your post, but I never found it either necessary or worthwhile to actually have one.

I never had an employer or client who demanded one: as Methinks pointed out every employer knows they are worthless.

Also never had an employer who offered to pay for me to get one. On the occasions when I considered it and looked into one, I decided the gain wasn't worth the effort, since I already knew the content. It was mostly and exercize in adopting a specific vocabulary.

I don't see that a shakedown by a private organization is any better than a shake-down by a government one, but I am not willing to accept the idea that Methinks proposes, that private shakedowns are always better, somehow. Or that alternatively, no shakedowns are required anyway, so we should just do without certs of any kind.

I think she is right about the CFA vs the MBA, though. Probably a sign of increasing income inequality.

Thanks, Paul, but I have to go back to just not reading 99% of his drivel. Even though it can be quite funny, it's not worth the time most of the time.

Hydra,

While employers, investors and customers know they're worthless, the state requires you to have them. Of course, likely your employer convinced they state they're necessary in order to protect himself from competition.

The point is, there can be no shake-down if certification is private - not the way I envision it. It would be completely voluntary. However, businesses will likely seek private certification if their customers value it - but only IF their customers value it.

Instead of benefiting politically connected firms, certifiers would be forced to benefit the customers. If they don't, the customers will not value those certifications and nobody in industry will want to pay for them.

In addition, since certifiers market to the consumer of the firms and products they certify, they have every incentive to make their process understandable and transparent to the average consumer. This would serve to educate and inform consumers.

For an example of a very good certifier, look at consumer reports. I don't give a rat's ass what the government has to say about a car. I am fairly ignorant about cars and so I have relied on consumer reports for nearly 30 years. Not only has their stamp of approval helped me to buy the best most reliable car in my changing price range and for my desired features, but they make the process of certification transparent and understandable to me.

We use something like a process of private certification for a wide variety of professionals already. For instance, I wouldn't dream of going to a new hair stylist or colourist without a recommendation from people whom I trusted in such matters. There a lots of state-licensed doctors, but most of us understand that someone who is licensed by the state is not necessarily a good doctor. Again, we seek out recommendations. In every place I've lived, we've had local magazines that rank doctors and I rely on the recommendations of doctors I've already identified as competent.

Further, I see no reason why you should not be free to seek the services of someone completely unlicensed or uncertified. I may not want to take that risk, but why should you be prevented from doing so? How many mothers who have never seen the inside of a beauty academy (and are devoid of any skill, if we're honest) chop their family's hair in the kitchen? Why should you be robbed of the option to let your neighbour's mother have a whack at your hair if you so choose?

" But by prohibiting thepractice of medicine by people who do not meet these require-ments, the government is injuring consumers who would buythe services of the outlawed competitors, is protecting “quali-fied” but less value-productive doctors from outside competi-tion, and also grants restrictionist prices to the remaining doc-tors.16 Consumers are prevented from choosing lower-qualitytreatment of minor ills, in exchange for a lower price, and arealso prevented from patronizing doctors who have a differenttheory of medicine from that sanctioned by the state-approvedmedical schools. How much these requirements are designed to “protect” thehealth of the public, and how much to restrict competition, maybe gauged from the fact that giving medical advice free withouta license is rarely a legal offense. Only the sale of medical advicerequires a license. Since someone may be injured as much, if notmore, by free medical advice than by purchased advice, themajor purpose of the regulation is clearly to restrict competi-tion rather than to safeguard the public."

. Only the sale of medical advicerequires a license. Since someone may be injured as much, if notmore, by free medical advice than by purchased advice, themajor purpose of the regulation is clearly to restrict competi-tion rather than to safeguard the public."

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Good point.

And this is exactly whey there is a push on to regulate more "nutritional supplements"

How much these requirements are designed to “protect” thehealth of the public, and how much to restrict competition...

Exactly. And how much to increase the size and scope of regulatory bureaucracy and how much to pander to populist politics?

FINRA, a regulator of financial firms, pays its examiners bonuses based on the amount they collect in fines. Its examiners have every incentive to fine firms for minor procedural infractions like not dating a signature their own rules don't require you to date. Paying a lawyer to challenge it is more expensive, so the shakedown is successful. And that's before we get to the unintended consequences of regulation. There are all kinds of costs of state regulation beyond just licensing.

"The Lab isn't an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services. It thrives, and makes our lives safer, by the power of its excellent reputation."

"The Lab isn't an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services. It thrives, and makes our lives safer, by the power of its excellent reputation."

We now have a ton of regulatory bureaucracies growing like weeds and established, politically connected businesses interested in growing said bureaucracies in order to protect themselves from competition. All at huge expense.

It's unlikely that my vision will ever become reality unless there is a widely supported grass-roots movement from the population. And it will have to be big, so I put the probability close to zero.

That doesn't make it an unworthy idea.

even if you once get certified, you must pay to continue to be certified, even if you learn nothing new of substance.

Only if your customers require it - and they likely will. Businesses should be subject to the whims of their customers. They should not be subject the whims of an over-active, overfed bureaucrat.

It is essentially the same as a private income tax

Sure. If an investor comes to me or Morganovich and we don't have what he wants, he won't invest. Is that a "tax" on us? I don't think so, but it is a consequence of not pleasing an investor. Even if it's not a "tax" per se, I understand what you're getting at (I think).

Do you not think customers have a right to impose standards on the people and firms with which they do business? Aren't they the appropriate people to impose such standards?

A very importanbt point: UL was protecting consumers for nearly 8 decades before OSHA was created. OSHA approval or review was never needed for UL to function well.

Why is any government agency needed, Larry? If UL can protect consumers from shoddy electrical appliances, other non-government organizations can protect consumers from medical quacks, shoddy automobiles, and every other government licensing and permit agency you can imagine.

" To reward its investors, a firm must first produce something that pleases consumers. "

I agree - if consumers knew.

how many consumers knew that paint on toys had lead in it?

how many knew that mercury is in fish?

in an unregulated free economy, companies are free to not tell consumers of harmful substances or flaws in their products.

when you buy a prescription for instance, you basically have no idea about the dosage and purity of the product.

We have DOT standards on tires. Before that any tire manufacture could put whatever they wished on the tire... could say it was "rated" at 120mph...even if they had never tested it... and how would you know?

who says that the prescription label is required to disclose certain info?

what would industry do if not required.

could they just lie about it?

how would you know if they did?

most of these laws did not originally exist.

they came about AFTER someone was harmed... and found out after the fact.

the Food and Drug law came about in 1906 - that's a long time ago long before many other regs.

" The Pure Food and Drug Act was initially concerned with ensuring products were labeled correctly. Later efforts were made to outlaw certain products that were not safe, followed by efforts to outlaw products which were safe but not effective. For example, there was an attempt to outlaw Coca-Cola in 1909 because of its excessive caffeine; caffeine replaced cocaine as the active ingredient in Coca-Cola in 1903. In the case United States v. Forty Barrels and Twenty Kegs of Coca-Cola, the judge found that Coca-Cola had a right to use caffeine as it saw fit, "

"if private industry chooses to only test some things but not others... what happens?"...

Well it can give people like you who apparently think its important a chance to invest your money and those you can convince and set up your own standards lab and sell the results to anyone who'll buy them...

"what did OSHA get created if the free market was "working?""...

It was another government excuse to extort more money from the private sector, nothing more, nothing less...

That's how it worked out for UL...

"what did OSHA get created if the free market was "working?""...

Very simple larry g, it was another federal government excuse to extort more money from the private sector...

OSHA is a CF - I would agree but it came about because Richard Nixon and Congress believed it was needed to inform workers of risks that their employers were not telling them and to establish standards for workplace exposure to deadly substances that harmed workers.

OSHA as a govt function exists in virtually every industrialized country.

we are starting to see a pattern here...

every single industrialized country - in the world - is characterized as "extorting money from the private sector".

Well, of course it would have! When people found out lead paint turns their kids into retards and it was in the paint of the toys they were buying, those parents were going to keep buying the toys and the company would keep producing them. Why would anyone assume parents would just stop buying toys containing lead paint and the company would see the lack of demand for lead paint toys and start painting toys with non-lead paint?

No way. Instead, the parents are going to demand a government bureaucracy stop them from buying lead paint toys. Yet, somehow the Chinese got past that bureaucracy a few years ago. The consequences to the bureaucracy of letting that slip in? Well, more power and funding, of course! What was it Juandos said about tits on an OSHA?

Some believe - and I agree - that the FDA and other regulators actually increase the risk to consumers. For some pharma companies, meeting the FDA's requirements provides a backstop for potential lawsuits. In many other cases, FDA red tape and bureaucracy has delayed the availability of life-saving treatments.

Former government economist Jim Grichar on how the FDA has increased risks to U,S. consumers:

"FDA regulations have often prevented U.S. consumers from gaining access to new life-saving drugs. Examples of this include major delays in the marketing of drugs used to treat cancer, blood pressure, heart attacks, cholesterol, and strokes and delays in marketing such high-tech items as cardiac pacemakers and in the use of such techniques as balloon angioplasty for blocked coronary arteries."

in a country where you have folks voting for representative govt - regs are often the outcome.

and it's not just here.

it's all over the world.

in every major industrialized country in the world - the outcome is pretty much the same.

Now some folks can look at this and demonize ALL govt as "extorting" from citizens... but I look at it and think.. this is what people must want because when they find out that for years and years that companies put lead in paint...and never told anyone they start to believe that the "free market" is not going to help them so they get govt to do it.

and yes..as Ms motormouth points out.. the regs are still evaded by some... but at the end of the day, a whole lot less kids are eating lead paint.

would that have happened if the govt had not interfered?

that seems to be the question.

Most folks do not think much would have changed without the govt.

when I see every major country in the world with a similar approach and every 3rd world country with a much less restrictive approach to regulation... I wonder why the 3rd world countries don't do better without the "regulatory drag".

it turns out apparently that every single one of them has other serious flaws like they are run by thugs.

there does not appear to be a single country in the world that has a true unregulated market...as advocated.

you'd think that there would be a few...one or two... and they would prosper by not having regulatory "drag".

If there is no state requirement to be certified, why would I sign up fo private certification?

Is this a serious question? Did you ever wonder why so many systems administrators had CCNA and/or an MCSE certfication despite not being required by law?

Your argument that private certification would be cheaper and more efficient does not seem to be borne out by the facts

Did you really just leave out the part where under government certification you have to get certified? In the private sector, the fact the uncertified can compete against the certified pretty much guarantees that private certification will be far more efficient. If the license really adds something, people will pay for it and employers will filter prospective employees base it.

Nice theory, but I don't see any examples in practice.

Maybe you should look outside of lumber. Or just as easily check out the two I mentioned above, or simply do a google search.

The arrogance in your statement is hilarious. You "don't see any", therefore it can't possibly be good. As we all know, you are the one and only person this whole world who knows how all employers and employees act and react in every single industry.

Try not to limit reality to what only you can imagine. I'm sure you would never have imagined fire in pre-fire days, th steam engine 2500 years ago, the cotton gin a couple hundred years ago, the transistor 100 years ago, or the iPhone just 15 years ago. If life for humans were limited to only what you can imagine, we'd still be living in caves all terrified of the sun.